G5 Entertainment: Beat on EBIT driven by FX, other items in line - ABG

Sales in line, EBIT +11% vs. ABGSCe, FX drivenOrganic growth -10% vs ABGSCe -8.5%Cons likely to cut sales 2-3% but keep EBIT flat

Q2 detailsSales SEK 331m (-1% vs ABGSCe 335m and -6% vs cons 353m), EBIT SEK 39m (11% vs ABGSCe 35m and 5% vs cons 37m), Net profit SEK 40m (23% vs ABGSCe 33m and 15% vs cons 35m). Organic growth was -10% (-1.5pp vs. ABGSCe -8.5%). FCF SEK 46m, which is strong.

Performance in line with ABGSCe, beat FX drivenSales was relatively in line while profitability was stronger than expected, mainly owing to other income of SEK 7.4m, however ( related to FX gains given the USD appreciation during Q2). Looking at the main cost items, cogs, R&D, marketing and D&A, they were all relatively in line. Therefore, it is unlikely that the stronger profitability will be extrapolated to coming quarters. User acquisition was slightly above expectations at 18.6% vs. ABGSCe 18.0%. DTC revenues through G5 Store continued to grow, +17% q-o-q, supporting further gross margin improvements. Gross margin was 67.4%, vs. 66.2% last year.

Estimate changesWe expect consensus to cut sales estimates by 2-3% on 2023e but keep EBIT relatively flat supported by the positive FX gains. Management will hold a presentation of the Q2 report 08:00 CET (link).Deviation tableSource: FactSet consensus

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